- Annual Worldwide Sales of Synagis(R) Exceed $1 Billion for First Time
Major Milestones Achieved in 2005
- $1.2 billion in 2005 total revenues, increasing nine percent over 2004
- RSV franchise strengthened and expanded
- Worldwide sales of Synagis grew 13 percent to $1.1 billion in 2005
- U.S. co-promotion and international distribution agreements for
Synagis restructured providing substantial strategic, operational and
financial benefits
- Completed enrollment in two late-stage studies with Numax(TM)
- Converted to liquid formulation of Synagis in U.S.
- Began clinical testing with combination vaccine against RSV and PIV-3
- In-licensed rights to anti-RSV small molecule compounds
- Substantial progress achieved with influenza vaccine franchise
- Pivotal Phase 3 trial results showed refrigerator-stable formulation
of FluMist(R), CAIV-T, was 55 percent more effective than flu shot
- sBLA for CAIV-T submitted to FDA for approval for use in healthy
5-49 year olds
- State-of-the-art influenza vaccine manufacturing facility approved by
FDA
- Patent estate expanded for using reverse genetics in influenza vaccine
production
- Entered into a research agreement with NIH to develop pandemic
influenza vaccines
- 11 new targets added to R&D portfolio
- Three Investigational New Drug applications filed
- HPV vaccine license agreement amended providing revenues from product
candidates being developed at both Merck and GlaxoSmithKline
GAITHERSBURG, Md., Feb. 2 /PRNewswire-FirstCall/ -- MedImmune, Inc.
(Nasdaq: MEDI) today announced that total revenues for 2005 were $1.2 billion,
representing a nine-percent increase over $1.1 billion in revenues for 2004.
For the 2005 fourth quarter, MedImmune's total revenues increased six percent
to $492 million from $466 million in the 2004 fourth quarter.
"2005 was one of the most productive years in MedImmune's 17-year
history," said David M. Mott, president and chief executive officer. "We made
excellent progress toward achieving our long-term objectives through several
strategic transactions. We continued to invest aggressively in building our
future with R&D expenditures reaching 31 percent of product sales as we
successfully completed multiple Phase 3 trials, filed three Investigational
New Drug applications, and added 11 new targets to our portfolio. On the
revenue side, our flagship product, Synagis (palivizumab), surpassed $1
billion in worldwide reported sales for the first time, while sales of frozen
FluMist (influenza virus vaccine live, intranasal) continued to be difficult
to predict. As previously indicated, we don't expect frozen FluMist to
contribute meaningfully to revenue growth until we introduce the next
generation of the vaccine, CAIV-T. We took a significant step toward that goal
in December 2005 when CAIV-T was shown in a Phase 3 trial to be 55 percent
more effective at preventing influenza than the traditional flu shot. We look
forward to continuing to make additional progress implementing our business
plan, which is focused on providing long-term value to our shareholders
through the development of important new drugs."
As the company's near-term activities have been focused on building for
the future, MedImmune reported a net loss for 2005 of $17 million, or $0.07
per share, as calculated in accordance with accounting principles generally
accepted in the U.S. (GAAP). This compares to a net loss of $4 million, or
$0.02 per share, in 2004. Both periods included charges associated with the
acquisition of research and development (R&D) assets that expanded MedImmune's
pipeline (see the description of these assets and related charges on the
reconciliation table on page 7). Excluding these charges, MedImmune's net
earnings for 2005 were $31 million, or $0.13 per diluted share, compared to
net earnings of $82 million, or $0.33 per diluted share, in 2004. For the
2005 fourth quarter, MedImmune's GAAP net loss was $22 million, or $0.09 per
share, compared to net earnings of $51 million, or $0.20 per diluted share, in
the 2004 fourth quarter. Excluding the charges related to the acquired R&D
assets mentioned above, MedImmune's net earnings for the 2005 quarter were $21
million, or $0.08 per diluted share, compared to net earnings of $55 million,
or $0.21 per diluted share, in the 2004 fourth quarter.
Product Sales
The following is a sales summary for the 2005 full year and fourth
quarter.
Percent Percent
FY2005 Change 4Q2005 Change
(in millions) vs. FY2004 (in millions) vs. 4Q2004
Total Product Sales $1,221 9% $482 5%
Synagis - Total 1,063 13 439 9
Synagis - U.S. 905 9 379 5
Synagis - ROW 158 45 60 43
Ethyol(R) (amifostine) 95 3 25 16
FluMist(R) 21 (56) 8 (61)
Worldwide sales of Synagis increased 13 percent in 2005 over 2004.
MedImmune reported 45-percent growth in sales of Synagis to our international
distributor, Abbott International, in 2005 as demand continued to increase in
several key international markets. During 2005, the label for Synagis was
expanded in Japan to include usage in children with congenital heart disease.
Synagis has now been approved in 61 countries outside the United States. In
the U.S., the first half of the calendar year was strong, while the 2005-2006
RSV season started slower than expected due primarily to changes in payer
guidelines, the effects of Hurricanes Katrina and Rita on certain sales
territories, and an early disruption in the product's distribution network. In
addition, sales patterns in the quarter were affected by conversion of the
U.S. supply from the lyophilized formulation to the new liquid formulation of
Synagis, which primarily occurred during the month of November.
In 2005, MedImmune's commercial activities for frozen FluMist continued to
focus on building awareness, support and usage of its live, attenuated
intranasal influenza vaccine technology in anticipation of launching the next-
generation, refrigerator-stable product, CAIV-T, in 2007. For the 2005-2006
influenza season, MedImmune distributed approximately 1.6 million doses of
frozen FluMist, including 1.3 million sold doses and the balance provided free
of charge through various channels, such as donations to 24 U.S. school
systems and to hurricane relief activities. In the 2004-2005 influenza season,
when one of the major flu shot manufacturers was absent from the market,
MedImmune sold approximately 2 million doses of frozen FluMist and donated
about 100,000 doses. The company anticipates that CAIV-T will have substantial
advantages over the current frozen formulation, including an expanded label to
include children less than five years of age. Toward that end, MedImmune
recently announced results from a Phase 3 study, involving children between 6
months and 59 months of age, that showed CAIV-T was 55 percent more effective
than the flu shot in reducing influenza illness caused by any circulating
influenza strain.
Margin and Operating Expense Analysis
For the year, gross margins on product sales were 72 percent in 2005
compared to 67 percent for 2004. For the fourth quarter, gross margins were 71
percent in both the 2005 and 2004 periods. Low sales volumes for FluMist
continue to exert downward pressure on overall gross margins. Excluding the
impact of FluMist, gross margins were 76 percent in 2005 and 75 percent in
2004. Excluding the impact of FluMist in the fourth quarter, gross margins
improved three percentage points to 78 percent in the 2005 period from 75
percent in the 2004 period primarily due to manufacturing efficiencies. Fourth
quarter 2005 margins on FluMist were lower than the fourth quarter 2004 due to
the write-off of unusable inventory.
In 2005, MedImmune in-licensed 11 new R&D targets; completed two Phase 3
clinical trials for CAIV-T; finalized patient enrollment in two late-stage
clinical trials for Numax, including the pivotal Phase 3 study for the
product; and continued to advance several other preclinical and clinical
programs. As a result of these activities, R&D expenses for 2005 increased to
$383 million, or 31 percent of product sales, from $300 million, or 27 percent
of product sales, in 2004. Included in R&D expenses are upfront and milestone
payments, which totaled approximately $54 million in 2005, compared to $19
million in 2004. R&D expenses for the 2005 fourth quarter were $117 million
compared to $120 million in the 2004 quarter.
Selling, general and administrative (SG&A) expenses in 2005 increased to
$498 million, or 41 percent of product sales, from $399 million, or 36 percent
of product sales, in 2004. In the 2005 fourth quarter, SG&A costs increased to
$199 million, or 41 percent of products sales, from $149 million, or 33
percent of product sales, in the 2004 quarter. The increases in SG&A in 2005
in both the year as a whole and the fourth quarter were due primarily to
amortization expense associated with reacquiring full promotion rights to
Synagis in the U.S.; the continuing expansion of MedImmune's pediatric sales
organization; and increased co-promotion expense for Synagis. The impact in
2005 of the amortization expenses associated with the reacquisition of the
rights to Synagis in the U.S. added three percentage points to SG&A as a
percentage of products sales for the year and eight percentage points for the
quarter. The impact in 2005 and 2004 of co-promotion expense for Synagis added
approximately 15 percentage points to SG&A as a percentage of product sales
for the years and 17 percentage points for the fourth quarters.
Income tax expense in 2005 was affected by charges associated with non-
deductible acquired in-process research and development (IPR&D) related to the
acquisition of Cellective Therapeutics, Inc. and corrections made in the
second half of 2005 to the prior accounting for deferred taxes. The
corrections were comprised of relatively small amounts related to reporting
periods dating back to the acquisition of Aviron in January 2002. Excluding
both the IPR&D charge and the effect of the corrections, the effective tax
rate for 2005 was approximately 41 percent, and the effective tax rate for the
2005 fourth quarter was 43 percent.
Other Results
Cash and marketable securities at December 31, 2005 were $1.5 billion as
compared to $1.7 billion at December 31, 2004. The decrease is primarily due
to the upfront payment related to the acquisition of full promotion rights to
Synagis; the acquisition of Cellective Therapeutics, Inc.; and repurchases of
approximately four million shares of common stock at a total cost of $106
million.
2006 Guidance
On January 1, 2006, MedImmune adopted the new accounting standard
(Statement of Financial Accounting Standards No. 123R) that requires the
company to recognize expense associated with share-based compensation
arrangements, including stock options. In the aggregate, MedImmune expects the
2006 pretax impact to be approximately $40 million, or $0.12 per share. This
expense will be reflected in cost of goods sold, R&D and SG&A. To aid
investors in understanding the underlying components of our business, the
guidance below excludes stock compensation expense.
MedImmune expects that total revenues for 2006 will grow about 10 percent
to approximately $1.4 billion. Gross margins are expected to be approximately
74 percent of product sales for the full-year 2006. R&D expense in 2006 is
expected to be approximately $400 million, or approximately 30 percent of
product sales. SG&A as a percentage of product sales is expected to decrease
to approximately 38 percent. SG&A is expected to include approximately seven
percentage points attributable to amortization of the repurchase of Synagis
co-promotion rights from Abbott and approximately eight percentage points
attributable to the remaining co-promotion expense. Co-promotion expenses are
expected to cease mid-year 2006, and will be only partially offset by
approximately $25 million in annualized selling expense due to the addition of
125 new sales representatives. The company's effective tax rate is expected to
be approximately 37 percent. MedImmune expects 2006 earnings per diluted share
will range from $0.40 to $0.45 before stock option expense.
DISCLOSURE NOTICE AND FORWARD LOOKING STATEMENTS
This announcement contains historical financial information as of and for
the years and three-month periods ended December 31, 2005 and December 31,
2004 that is unaudited (except for the GAAP information as of and for the year
ended December 31, 2004), and MedImmune assumes no obligation to update this
information based on new information or future performance except as may be
specifically required by applicable law or regulation. The unaudited annual
financial information is subject to audit by independent accountants on an
annual basis following the close of each calendar year. Such an audit is
currently ongoing and the unaudited information presented in this announcement
as of and for the year ended December 31, 2005 is subject to adjustment based
on the results of the audit. Accordingly, the financial information that will
be reported in MedImmune's Annual Report on Form 10-K for the year ended
December 31, 2005 may vary from the financial information presented in this
announcement. In addition, in compliance with Section 404 of the Sarbanes-
Oxley Act of 2002, management is in the process of reviewing the company's
internal controls over financial reporting and MedImmune's external auditor is
in the process of evaluating management's assessment. There can be no
assurance that all such internal controls will be free of all deficiencies or
that any such deficiencies will not rise to the level of a significant
deficiency or material weakness.
This announcement also contains forward-looking statements regarding
MedImmune's future financial performance and business prospects. Those
statements involve substantial risks and uncertainties and are present in the
section captioned "2006 Guidance," as well as other sections containing
statements with words such as "anticipate," "believe," "estimate," "expect,"
"intend," "project" or other terms of similar meaning. Those statements
reflect management's current beliefs and are based on numerous assumptions,
which MedImmune cannot control and which may not develop as MedImmune expects
for reasons set forth in MedImmune's Annual Report on Form 10-K for the year
ended December 31, 2004, its subsequent quarterly reports on Form 10-Q, its
current reports on Form 8-K filed for events occurring in 2006 and other
public disclosures and filings with the U.S. Securities and Exchange
Commission. Consequently, actual results may differ materially from those
projected in the forward-looking statements.
MedImmune is also developing several products for potential future
marketing and the overall success of these development efforts is important
for the company's long-term prospects. There can be no assurance that such
development efforts will succeed, that such products will receive required
regulatory clearance or that, even if such regulatory clearance is received,
such products will ultimately achieve commercial success.
This press release, including the reconciliation of certain data presented
in this release to their most comparable GAAP measures, can be found on
MedImmune's website at http://www.medimmune.com in the box marked "News" or
with the archived press releases on the Investor Summary page.
Conference Call & Webcast
MedImmune is offering a live webcast of a discussion by MedImmune
management of its earnings and other business results on Thursday, February 2,
2006 at 8:00 a.m. eastern time. The live webcast may be accessed in the
investor section of MedImmune's website, www.medimmune.com. A replay of the
webcast will also be available via the MedImmune website until February 9,
2006. An audio replay of the webcast will be available beginning at 10:00 a.m.
eastern time on February 2, 2006 and ending at midnight February 9, 2006 by
calling (888) 286-8010. The passcode for the audio replay is 72281642.
About MedImmune, Inc.
MedImmune strives to provide better medicines to patients, new medical
options for physicians, rewarding careers to employees, and increased value to
shareholders. Dedicated to advancing science and medicine to help people live
better lives, the company is focused on the areas of infectious disease,
cancer and inflammatory diseases. With more than 2,000 employees worldwide,
MedImmune is headquartered in Maryland. For more information, visit the
company's website at www.medimmune.com.
MedImmune, Inc.
Consolidated Statements of Operations
(in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Revenues: (unaudited) (unaudited) (unaudited) (audited)
Product sales $481.6 $457.8 $1,221.0 $1,124.0
Other revenues 10.4 8.0 22.9 17.1
492.0 465.8 1,243.9 1,141.1
Costs and expenses:
Cost of sales 140.2 130.5 336.7 366.4
Research and development 116.8 120.0 382.6 299.5
Selling, general and
administrative (1) 198.9 149.5 498.4 399.2
Other operating expenses 3.2 2.3 12.5 8.6
Impairment of intangible asset - - - 73.0
Acquired in-process research and
development (IPR&D) 43.7 0.7 48.4 29.2
Technology transfer and
transition expenses 0.1 5.3 2.0 28.8
502.9 408.3 1,280.6 1,204.7
Interest income, net 9.6 13.4 52.8 57.1
Gain (loss) on investment
activities (8.1) 2.0 (8.6) (2.7)
Earnings (loss) before
income taxes (9.4) 72.9 7.5 (9.2)
Provision (benefit) for income
taxes 13.0 22.4 24.1 (5.4)
Net earnings (loss) $(22.4) $50.5 $(16.6) $(3.8)
Basic earnings (loss)
per share $(0.09) $0.20 $(0.07) $(0.02)
Shares used in computing basic
earnings (loss) per share 246.4 248.7 246.9 248.6
Diluted earnings (loss)
per share $(0.09) $0.20 $(0.07) $(0.02)
Shares used in computing
diluted earnings (loss)
per share 246.4 258.9 246.9 248.6
(1) In August 2005, the company acquired full promotion rights in the
U.S. for Synagis(R), effective July 1, 2006. In connection with this
transaction, the company recorded an intangible asset of $360.4
million which represents the fair value of the exclusive promotion
rights, determined as the aggregate value of the probable additional
payments to be made as a result of the amended terms of the agreement
in excess of the value of the co-promotion services to be rendered,
as determined under the previous agreement. Amortization expense of
$37.4 million was recognized during the fourth quarter of 2005 and
$41.3 million was recognized during the year, and is included in
selling, general & administrative expense in the consolidated
statements of operations.
MedImmune, Inc.
Reconciliation of GAAP Results to Adjusted Results
(in millions, except per share data)
Presented in the following table is a reconciliation of reported net
earnings (loss) under GAAP to net earnings (loss) excluding items related to
the acquisition of the influenza vaccine franchise from Wyeth in 2004 and the
acquisition of Cellective Therapeutics, Inc. in 2005 (collectively the "Wyeth
and Cellective transactions"). The transition activities associated with the
termination of the agreement with Wyeth are substantially complete.
MedImmune's management excludes the impact of the charges associated with the
Wyeth and Cellective transactions when evaluating the company's ongoing
performance, and provides the following reconciliation to aid investors in
their understanding of underlying performance trends.
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
(Unaudited)
Item:
Net earnings (loss), as reported (1) $(22.4) $50.5 $(16.6) $(3.8)
Impairment of intangible asset (2) - - - 73.0
Acquired in-process research and
development (3) 43.7 0.7 48.4 29.2
Technology transfer and transition
expenses (4) 0.1 5.3 2.0 28.8
Income taxes (5) - (1.6) (2.4) (45.3)
Net earnings, as adjusted $21.4 $54.9 $31.4 $81.9
Basic earnings (loss) per share,
as reported (0.09) 0.20 (0.07) (0.02)
Diluted earnings (loss) per share,
as reported (0.09) 0.20 (0.07) (0.02)
Basic earnings (loss) per share,
as adjusted 0.09 0.22 0.13 0.33
Diluted earnings (loss) per share,
as adjusted 0.08 0.21 0.13 0.33
Shares used to compute earnings
(loss) per share:
Basic, as reported 246.4 248.7 246.9 248.6
Diluted, as reported 246.4 258.9 246.9 248.6
Basic, as adjusted 246.4 248.7 246.9 248.6
Diluted, as adjusted 258.1 258.9 249.7 251.2
(1) Prepared in accordance with accounting principles generally accepted
in the United States (GAAP).
(2) Represents the addback of the noncash impairment charge associated
with the termination of our collaboration with Wyeth for the
unamortized portion of the intangible asset initially recorded upon
our acquisition of MedImmune Vaccines, Inc.
(3) Represents the addback of the portion of the amounts paid to Wyeth
for the reacquisition of the influenza vaccines franchise that was
allocated to IPR&D, as well as IPR&D charges associated with the
acquisition of Cellective.
(4) Represents the addback of the payments for certain transition
activities, largely comprised of amounts paid to Wyeth for the
manufacture of CAIV-T clinical trial materials, transition of
clinical trial data, and transfer of manufacturing technology
knowledge.
(5) Represents the adjustment to income taxes associated with the
impairment of intangible asset, IPR&D and the technology transfer and
transition charges.
MedImmune, Inc.
Condensed Consolidated Balance Sheets (1)
(in millions)
December 31, December 31,
2005 2004
(unaudited) (audited)
Assets:
Cash and marketable securities $1,471.9 $1,706.1
Trade and contract receivables, net 284.3 206.6
Inventory, net 68.5 64.1
Deferred taxes, net 186.6 177.9
Property and equipment, net 381.4 310.9
Goodwill and intangible assets, net (2) 334.5 37.9
Other assets 51.9 60.9
$2,779.1 $2,564.4
Liabilities and shareholders' equity:
Accounts payable $37.0 $34.7
Accrued expenses 334.2 317.7
Other liabilities (2) 331.2 30.3
Debt 506.2 507.1
Shareholders' equity 1,570.5 1,674.6
$2,779.1 $2,564.4
Common shares outstanding 247.0 248.5
(1) Certain prior period amounts have been reclassified to conform to
current presentation.
(2) In August 2005, the company acquired full promotion rights in the
U.S. for Synagis(R), effective July 1, 2006. In connection with this
transaction, the company recorded an intangible asset of $360.4
million which represents the fair value of the exclusive promotion
rights, determined as the aggregate value of the probable additional
payments to be made as a result of the amended terms of the agreement
in excess of the value of the co-promotion services to be rendered,
as determined under the previous agreement. In addition, certain of
the additional payments under the agreement totaling $291.6 million
that the company deems probable have been aggregated and recorded as
liabilities in the consolidated balance sheet.
SOURCE MedImmune, Inc.
CONTACT:
Investors:
Peter Vozzo, +1-301-398-4358
John Filler, +1-301-
398-4086
Media:
Jamie Lacey, +1-301-398-4035